EURUSD
The EURGBP held a key support level on the daily chart and is seeking to mount a comeback rally. The pair shrugged off disappointing German consumer confidence numbers this morning as it moves higher by 0.25%.
Germany’s GfK consumer confidence was expected to rise strongly to 1.2 this month after three months of gains, but the indicator crashed to a reading of -1.8. The drop in confidence was led by a fall in income expectations and consumers are also concerned at the rise in virus infections in the region, which are slowing the re-opening of the economy.
Analysts were hoping that consumer spending would get a boost from a cut in VAT that was initiated by the German government in June. The German parliament decided on a six month cut in VAT from 19% to 16% as they looked to stimulate the economy.
The EURGBP pair has shrugged off the German figures and is taking its strength from the Euro, which is up 0.8% this morning versus the U.S. dollar. This is outperforming a 0.6% rise in the GBP v USD as the currency market absorbs the comments from Federal Reserve chair Jerome Powell yesterday.
In my last article on the pair, EURGBP Tests Support Ahead of Bailey, I pointed to the support level at 0.8950 as key to the downside move. Yesterday’s close held that level after an attempt to breach it and we are now watching the bounce unfold. The first resistance level on the upside is at 0.9000 and is closely followed by 0.9050. A close below the same support level of 0.8950 would be the place to cut losses on long positions.
